Monday, November 27, 2006

Bring back Bill Clinton:

Ok not him exactly but his strong dollar policy. Over the last couple of years the U.S. dollar has continued to get weaker against its European competitors. Over the last couple of days the Euro has crossed the $1.30 mark to the dollar and the British Pound is near $2.00.

For some crazy reason the Bush administration has failed to support the dollar during its continuous decline. During the Clinton administration, Bill and his Treasury Secretaries constantly supported the dollar because they understood a strong dollar meant good things for the economy and it’s markets.

As a nation that imports as much consumer goods as we do, a strong dollar assures they’ll remain cheap allowing us to consume more. When the dollar falls, imports become expensive leading to less consumption and economic decline. Worse a weaker dollar leads to higher interest rates since the Fed is forced to raise rates to attract foreign capital.

If a weak currency were the better solution, countries like Argentina and Brazil would be economic superpowers.

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